Monday, May 17, 2010

Sterling hits 13-month low vs dollar

LONDON, May 17 (Reuters) - Sterling hit a 13-month low against the dollar on Monday and also slipped versus the euro as data showing a slowdown in UK house price growth raised concerns about the health of the domestic economy.

Property web site Rightmove said on Monday asking prices for British residential properties rose more slowly in May than they did in April in a sign that the past year's run-up in the housing market may be cooling off. [nLDE64C1G4]

The data comes as investors grew worried that fiscal tightening measures by the new UK government, which plans to cut 6 billion pounds of spending this financial year, would hit the country's growth.

"It's the general concern about debt, and the UK falls into that bracket given (its) deficit levels," said Geraldine Concagh, economist at AIB Group Treasury in Dublin.

"Housing data could've weighed a little bit as it came weaker than expected. It fits into the view the recovery in the housing market we saw is slowing down."

By 0700 GMT the pound stood at $1.4388 , having fallen more than one percent on the day earlier to $1.4253, its lowest since late March 2009.

The pound lost almost half a percent to 85.46 pence per euro .

New British finance minister George Osborne will on Monday launch a new fiscal watchdog to ensure the government is held to account on how it tackles the record budget deficit, running at close to 12 percent of gross domestic product.

"The required fiscal consolidation will put considerable strains on the real economic development in the near future. The recovery from the recession will be slow," Commerzbank (Xetra: 803200 - news) said in a note to clients.

"So sterling competes with the euro for the position of the weakest currency."

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